If the DOJ’s rhetoric of holding individuals accountable in the context of corporate resolutions is to mean anything (as noted in this prior post, since 2008 approximately 75% of DOJ corporate enforcement have not resulted in any related individual charges against company employees) the BizJet corporate action was one where related individual enforcement actions were to be expected given the DOJ’s prior specific allegations concerning the above individuals.

It turns out that the above individuals were criminally charged some time ago, but last Friday, in this release, the DOJ unsealed the actions and revealed the names of the above individuals.

Executive A is Bernd Kowalewski; Executive B is Peter DuBois; Executive C is Neal Uhl; and Sales Manager A is Jald Jensen.

In the release, the DOJ announced as follows.

“Kowalewski and Jensen were charged by indictment filed in U.S. District Court for the Northern District of Oklahoma on Jan. 5, 2012, with conspiring to violate the Foreign Corrupt Practices Act (FCPA) and to launder money, as well as substantive charges of violating the FCPA and money laundering. The two defendants are believed to remain abroad.”

The DOJ further announced as follows.

“DuBois and Uhl pleaded guilty on Jan. 5, 2012, to criminal informations, and their pleas were unsealed [last Friday]. DuBois pleaded guilty to one count of conspiracy to violate the FCPA and one count of violating the FCPA. Uhl pleaded guilty to one count of conspiracy to violate the FCPA. Both defendants were sentenced [last Friday] by U.S. District Judge Gregory K. Frizzell in the Northern District of Oklahoma. DuBois’s sentence was reduced from a sentencing guidelines range of 108 to 120 months in prison to probation and eight months home detention based on his cooperation in the government’s investigation. Uhl’s sentence was similarly reduced for cooperation from a guidelines range of 60 months in prison to probation and eight months home detention.”

The conduct at issue in the indictments and informations is the same core set of conduct at issue in the 2012 BizJet corporate enforcement action. That is, DOJ allegations that the individuals ”paid bribes to officials employed by the Mexican Policia Federal Preventiva, the Mexican Coordinacion General de Transportes Aereos Presidenciales, the air fleet for the Gobierno del Estado de Sinaloa in Mexico, the air fleet for the Estado De Roraima in Brazil, and the Republica de Panama Autoridad Aeronautica Civil in exchange for those officials’ assistance in securing contracts for BizJet to perform MRO [aircraft maintenance, repair and overhaul] services.”

This post summarizes the indictments (here and here) against Kowalewski (the President and CEO of BizJet between 2004 through March 2010) and Jensen (a regional sales manager at BizJet between 2004 and 2010). A future post will summarize the enforcement actions against DuBois and Uhl. The informations in those cases (here and here) have been released, but the plea agreements and sentencing documents are not yet in the public domain.

Kowalewski Indictment

At its core, the indictment alleges a scheme “to obtain and retain MRO service contracts and other business for BizJet and others from foreign government customers, including the Mexican Federal Police, the Mexican President’s Fleet, Sinaloa, the Panama Aviation Authority, the State of Roraima, and other customers, by paying bribes to foreign officials employed by such customers.” According to the indictment, the bribe payments were called ‘commission,’ ‘incentives’ or ‘referral fees.” The indictment also alleges that Kowalewski and others “would and did attempt to conceal the payments to foreign officials by using Avionica [a California company owned by Jensen and located at his personal residence that operated "under the pretense of providing aircraft maintenance brokerage services"] to funnel the payments to the foreign officials by making payments in cash delivered by hand to the foreign officials.”

The six counts of FCPA anti-bribery violations are based on the following:

“check mailed in the amount of $20,000 by BizJet in Tulsa, OK to [Panamanian Official] in return for [the official's] assistance in securing business for BizJet with the Panama Aviation Authority”

“wire transfer in the amount of $30,000 from BizJet’s bank account in New York to Avionica’s bank account in California for use to bribe [Mexican Official] in return for [the official's] assistance in securing business for BizJet with the Mexican President’s Fleet”

“wire transfer in the amount of $18,000 from BizJet’s bank account in New York to Avionica’s bank account in California for use to bribe [Mexican Official] in return for [the official's] assistance in securing business for BizJet with Sinaola”

“wire transfer in the amount of $176,000 from BizJet’s bank account in New York to Avionica’s bank account in California for use to bribe foreign officials employed by the Mexican Federal Police in return for their assistance in securing business for BizJet with the Mexican Federal Police”

“wire transfer in the amount of $210,000 from BizJet’s bank account in New York to Avionica’s bank account in California for use to bribe foreign officials employed by the Mexican Federal Police in return for their assistance in securing business for BizJet with the Mexican Federal Police”

“two checks mailed in the amount of $22,912.38 and $6,417.44 by BizJet in Tulsa, OK to [Mexican Official] in return for [the official's] assistance in securing business for BizJet with Sinaloa.”

Like the BizJet corporate enforcement action, the Kowalewski indictment also contains allegations which suggest a complicit board of directors at the company. The indictment states as follows concerning a November 2005 board meeting:

Kowalewski explained at the meeting that “directors of maintenance and chief pilots in the past received ‘commission’ of $3,000 to $5,000 but were now demanding $30,000 to $40,000 in ‘commission.”

In response to a question by a director about how BizJet would survive the next six months without ‘burning cash,’ Kowalewski stated that BizJet expected to gain market share by paying ‘referral fees’ just as the competition was doing.

The indictment also alleges as follows.

“[In January 2010], after receiving an e-mail stating that the internal auditors of BizJet’s parent company would be conducting a detailed audit of BizJet’s incentive payments and requesting that Kowalewski prepare and make available all relevant documents, Kowalewski caused deletion software to be installed and run on his computer that erased content from his computer.”

Based on the above allegations, the DOJ charged Kowalewski with one count of conspiracy to violate the FCPA’s anti-bribery provisions, six counts of FCPA anti-bribery violations. In addition, the indictment charges one count of money laundering conspiracy and three counts of substantive money laundering.

Jensen Indictment

At its core, the indictment alleges the same scheme as in the Kowalewski indictment, including the same six substantive FCPA anti-bribery violations, as well as money laundering conspiracy and three counts of substantive money laundering. The Jensen indictment further alleges FCPA and money laundering forfeiture allegations which state that “upon conviction” of the offenses, Jensen “shall forfeit” to the U.S. “any property, real or personal, which constitutes, or is derived from, proceeds traceable to the offenses.”

Acting Assistant Attorney General Mythili Raman stated in the DOJ release as follows.

“The charges announced today allege a conspiracy by senior executives at BizJet to win contracts in Latin American countries through bribery and illegal tactics. Former BizJet executives, including the former president and chief executive officer, allegedly authorized and caused hundreds of thousands of dollars to be paid directly and indirectly to ranking military officials in various foreign countries, and two former executives have pleaded guilty for their roles in the conspiracy. These charges reflect our continued commitment to holding individuals accountable for violations of the FCPA, including, as in this instance, after entering into a deferred prosecution agreement with their employer.”

Assistant Director in Charge Valerie Parlave of the FBI’s Washington Field Office stated in the DOJ release as follows.

“Business executives have a responsibility to act appropriately in order to maintain a fair and competitive international market. The unsealing of these bribery charges, and today’s sentencing, demonstrate that the FBI is committed to curbing corruption and will pursue all those who try to advance their businesses through bribery.”

The former BizJet executive enforcement action announced last Friday is the first FCPA enforcement action of 2013. The last DOJ FCPA enforcement action (of any kind – corporate or individual) was in September 2012 and the last time the DOJ brought an FCPA enforcement action against an individual was in April 2012. (See here for the prior post).